Rival bidder takes PetroSA to court over Gazprom/Equator tenders

However, a new court case threatens to crack open its two most controversial deals: the gas-to-liquids refinery deal with Russia’s Gazprombank and the gas finance-and-infrastructure deal with businessman Lawrence Mulaudzi.

Two weeks ago, Phezulu Natural Energy Resources, a rival bidder, filed a case asking the Cape Town high court to set aside Mulaudzi’s deal. However, in a novel legal twist, Phezulu is also demanding access to the decision-making records of the Gazprombank tender, which – it alleges – was illegally split for Mulaudzi’s benefit.

It’s a complicated story, so let me explain:

In January last year, PetroSA – the state-owned oil and gas company – issued a flurry of tenders designed to kickstart the offshore gas industry:

• RFP 0001/2023 would restart the mothballed gas-to-liquids refinery in Mossel Bay,
• RFP 0003/2023 would drill gas wells off the southern coast, and
• RFP 0004/2023 would source funding for the drilling program.

Then PetroSA went quiet – until December, when amaBhungane reported that PetroSA was planning to award RFP 0001/2023 – worth roughly R3.7-billion – to Gazprombank Africa, a local subsidiary of Russia’s state-owned gas giant.

The deal was controversial: Gazprombank had been selected after all 19 other bidders were eliminated for technical reasons. Dealing with a Russian entity, currently under Western sanctions, made it even riskier.

PetroSA held a press conference defending its decision to award RFP 0001/2023 to Gazprombank, but didn’t mention that its executives planned to sign an even bigger deal as soon as they left the conference room.

In January, amaBhungane published a second exposé, showing how – hours after the press conference – PetroSA had held a private signing ceremony with Mulaudzi, which awarded his company, Equator Holdings, an expansive deal to finance and build all of the infrastructure needed to bring gas onshore.

The deal was potentially worth as much as R21.6-billion and would have made Mulaudzi an overnight oligarch. The scope of work awarded to Equator, however, strayed far outside of the original tender (RFP 0004/2023).

“It appeared that RFP 0004/2023 was potentially awarded irregularly by PetroSA

to Equator as it clearly included ‘scope creep’,” Phezulu director André Cilliers told the court.

Phezulu had submitted a bid for the gas-to-liquids refinery in Mossel Bay (RFP 0001/2023), but not for RFP 0004/2023, which was supposed to be limited to sourcing finance, not building infrastructure.

After the December press conference, however, it became clear that PetroSA had split RFP 0001/2023 in two: Gazprombank would only be given the portion of the refinery that deals with liquid fuels, while the gas loop, which Phezulu was interested in, was mysteriously cut out of the deal.

Phezulu would only realise where this portion of the tender had gone when Mulaudzi came knocking at their door the following day.

“Mr Lawrence Mulaudzi from Equator contacted me personally to enquire about the technical expertise of Phezulu and its consortium and technical partners, including financial capabilities. Mr Mulaudzi and I then arranged for an introductory meeting to be held between ourselves on 13 December 2023 in Cape Town,” said Cilliers.

At a meeting the following day, Mulaudzi showed Phezulu a copy of the Gas Infrastructure agreement he had signed with PetroSA and shared a photograph of the private signing ceremony.

What Phezulu suspected was that PetroSA had taken half of RFP 0001/2023 and handed it to Equator Holdings….

Author: Susan Comrie